In Spite of Disaster and Disease Trade is Roaring Back

Commentary, Economy, Gerard A. Lucyshyn

In November 2021, B.C. suffered the wrath of a Pineapple Express. Extreme rain from an atmospheric river dumped a month’s worth of rain within a few days causing rivers to overflow, farmlands to flood, and mudslides that wiped out nearly all major highways connecting B.C. to the rest of the country, forcing nearly 20,000 people from their homes.

The damage to the transportation infrastructure limited the movement of goods further inland as well as reduced exports of coal, farm, and fishing products, all of which depend heavily on the Vancouver marine terminals.

November also brought stricter measures from the federal government of Canada on travel, mandating full vaccination for travel within and out of Canada on flights and railways. The federal government also embarked on a new campaign to encourage the vaccination of children aged 5 to 11 and expanded the list of COVID-19 vaccines to include Sinopharm, Sinovac, and Covaxin, as a part of their efforts to battle the spread of the COVID-19 variants.

Impacts such as these can be reflected in Canada’s trade statistics.

There are two methods used when collecting trade data: the Balance of Payment method and the Customs-based method.

The Balance of Payment (BOP) method collects data from Statistics Canada surveys and/or other sources, including the Canada Border Services Agency (CBSA), the U.S. Census Bureau, and the Canada Energy Regulator. Collected information from these sources on imports and exports is used for the Canadian Macroeconomic Accounts and in the formulation of trade and budgetary policies.

When goods are imported or exported, declarations must be filed with CBSA. Declarations include the description and value of the goods, origin, and port of clearance of commodities, and mode of transport. This information is compiled into statistics referred to as Customs-based trade statistics. The Customs-based trade statistics are used to report and analyze the value of exports and imports by commodity, province or territory, and partner countries.

The major difference between BOP and Customs-based is that customs-based data reflects trade that crosses economic territories. In other words, Custom documents reflect the physical movement of goods, whereas BOP data reflects changes of ownership of merchandise between residents and non-residents of Canada. Further, Customs-based data covers all countries and commodities that trade with Canada, while BOP data only covers the 27 principal trading partners (PTPs) of Canada.

Both BOP and Customs are a part of the Canadian International Merchandise Trade Program and both sets of trade statistics are used by governments, importers, exporters, manufacturers, and shipping companies to monitor import penetration and export performance, commodity price and volume changes, and to examine the transport implications of trade flow.

The primary objective of the Canadian International Merchandise Trade Statistical Program is to measure the change in Canada’s stock of material resources resulting from the movement of merchandise into or out of the country. Information on imports and exports are used in the System of National Accounts, particularly in the reporting of Canada’s balance of payments and gross domestic product (GDP).

The International Merchandise Trade Price Index (IMTPI) is a composite price index designed to express, in a single index, price changes that involve a range of commodities. There are a number of organizations that provide Canada with proxies that are used in the calculation of the IMTPI.

The United States Bureau of Labor Statistics publishes the Producer Price Index (PPI) which measures the average change over time in the selling prices received by US producers for their output. The PPI is used to calculate IMTPI’s import price indices.

Statistics Canada’s Producer Prices Division (PPD) publishes three indices. The Industrial Product Price Index (IPPI) measures price changes for major commodities sold by manufacturers in Canada and is used to calculate IMTPI’s export price indices. The Computer and Peripheral Price Index (CPPI) which measures changes in the price of computers and computer peripherals sold to governments, businesses and consumers, and is used by IMTPI to to measure price changes in imports of computer parts. The Export Import Price Index measures price changes for key commodities that have proven difficult to measure through other methods.

The Bank of Japan publishes the Corporate Goods Price Index (CGPI) which measures price changes for goods traded in the Japanese corporate sector. IMTPI uses the export data from the CGPI to measure Canada’s import prices for goods imported from Asian countries.

The Canada Energy Regulator provides price data on electricity and crude petroleum and the Energy Statistics Program of Statistics Canada provides data on exports of crude petroleum and natural gas.

In spite of disaster and disease, total exports and imports increased by 3.8% and 2.4%, respectively, resulting in a merchandise trade surplus of $3.1 B. This marked the fifth increase in the previous six months indicating that the economy is roaring back more quickly than anticipated.

 

Gerard Lucyshyn is an economist and an economics lecturer in the Department of Economics, Justice and Policy Studies at Mount Royal University in Calgary, Alberta. He has also served as a business and economic consultant to a variety of industries. Gerard has authored a number of articles and research papers on municipal, provincial, federal and international economic and policy issues.